Competitive Issues Cloud Cendant-RAC Merger

Still reeling from its disclosure of widespread accounting fraud, Cendant Corp. is now facing a delay in its acquisition of RAC Motoring Services pending a review of possible anti-competitive violations by the United Kingdom Monopolies and Mergers Commission.

The $730 million cash merger, announced in May, was expected to be completed by the end of the summer but will now be delayed until at least Dec. 23 when the MMC will report its findings to the U.K. Secretary of State.

"While the referral will delay the completion of the transaction, we are confident that the proposed acquisition does not give rise to competitive concerns and will therefore be cleared by the MMC,'' Cendant vice chairman Stephen Holmes said in a prepared statement.

Cendant, Parsippany, NJ, plans to merge parts of RAC with National Parking Corp. to form a U.K.-based travel and roadside assistance club that would provide a database of 2 million addresses names and generate 200,000 new prospects per year. The Cendant's lagging stock price -- it closed Sept. 24 at 13 1/2 -- will not affect the acquisition, which it will pay for with funds from a $3.25 billion credit facility.